Joel Bakan’s ‘The Corporation’

I’ve written before about how interesting I find the intersection between the legal structures that create a company, and the social impacts that those structures have. The Company by John Micklethwait and Adrian Woolridge was valuable in providing a historical context for the creation of companies, but it didn’t really go beyond that.

The Corporation: The pathological pursuit of profit and power by Joel Bakan doesn’t focus on the history, but tries to go a little beyond that, to questions of how companies (or corporations*) influence society.

For the most part though, it focuses on the central thesis – that companies (or corporations*) are a specific structure that leads directly to imposing costs on society. The quotes below are indicative of the broad sweep of his argument. It’s a fascinating read.

Joel Bakan, as a legal academic, has some credibility when he writes in this area. The book itself feels like it could have more depth, and there’s certainly room to extent more into questions of how corporations are structured internally, and how they interact with societies, beyond the basic question of imposing costs (or externalities).

But it’s an interesting read. A particularly fascinating point for me was reading about the ‘cocktail putsch‘: an abortive plot to undertake a coup against the New Deal, which may never have gotten very far, but is interesting even as a fanciful discussion.

Bakan concludes with a set of recommendations. He dithers between being idealistic and recommending marginal tweaks, and ultimately ends up being anemic, with the kind of recommendations that are so vague as to be able to encompass a thousand possibilities.

Overall, this one could have been better with more depth and theory, but it’s worth it, simply as an interesting discussion of what to my mind is an under-analysed area.

*Yes, there may be some technical legal differences between a company and a corporation that I’ve missed; they’re not important for the purposes of either of these books.

Quotes

Businessmen and politicians had been suspicious of the corporation from the time it first emerged in the late sixteenth century. Unlike the prevailing partnership form, in which relatively small groups of men, bonded together by personal loyalties and mutual trust, pooled their resources to set up businesses they ran as well as owned, the corporation separated ownership from management- one group of people, directors and managers, ran the firm, while another group, shareholders, owned it. That unique design was believed by many to be a recipe for corruption and scandal. Adam Smith warned in The Wealth of Nations that because managers could not be trusted to steward “other people’s money,” “negligence and profusion” would inevitably result when businesses organized as corporations …

Stockholding could not become a truly attractive option for the general public until that risk [personal liability] was removed, which it soon was …

1,800 corporations were consolidated into 157 between 1898 and 1904. In less than a decade the U.S. economy had been transformed from one in which individually owned enterprises competed freely among themselves into one dominated by a relatively few huge corporations, each owned by many shareholders …

By the end of the nineteenth century, through a bizarre legal alchemy, courts had fully transformed the corporation into a “person”, with its own identity, separate from the flesh-and-blood people who were its owners and managers … The corporate person had taken the place, at least in law, of the real people who owned corporations … Gone was the centuries-old “grant theory”, which had conceived of corporations as instruments of government policy and as dependent upon government bodies to create them and enable them to function …

The “best interests of the corporation” principle, now a fixture in the corporate law of most countries, addresses Smith’s concern by compelling corporate decisions always to act in the best interests of the corporation, and hence its owners. The law forbids any other motivation for their actions, whether to assist workers, improve the environment, or help consumers save money … As corporate officials … stewards of other people’s money, they have no legal authority to pursue such goals as ends in themselves-only as means to serve the corporation’s own interests, which generally means to maximize the wealth of its shareholders. Corporate social responsibility is thus illegal-at least when it is genuine …

“The structure,” says Kernaghan, “the whole system, just drags everybody with it.” At the heart of that structure is a simple dynamic: a corporation “tends to be more profitable to the extent it can make other people pay the bills for its impact on society,” as businessman Robert Monks describes it. “There’s a terrible word that economists use for this called ‘externalities.'”

The corporation’s unique structure is largely to blame for the fact that illegalities are endemic in the corporate world. By design, the corporate form generally protects the human beings who own and run corporations from legal liability, leaving the corporation, a “person” with a psychopathic contempt for legal constraints, the main target of criminal prosecution …

There is little democracy in a system that relies on market forces and nongovernmental organizations to promote socially responsible behavior from corporations …

Advertisements

Articles: Left field routes to Mars, and complex systems managing nuclear weapons

Katy Vine has an interesting piece in The Texas Monthly, ‘The Astronaut Who Might Actually Get Us to Mars‘. I’m not across the technology, so I don’t know how probable his approach is. But it’s an interesting reflection on how solutions sometimes come from improbable places. I hadn’t realised that the lunar lander was a project initiated counter to most of NASA’s beliefs at the time.

Eric Schlosser writes in the New Yorker about all the things that can go wrong, in ‘World War Three, By Mistake‘. It’s a piece written before the 2016 US election, so it focuses in on the systems rather than the personalities, but it’s all the more terrifying for that. It’s also worth checking out Alex Wellerstein’s blog, which is an interesting historical context for nuclear weapons.

Articles: Democracy, Free Speech, and the Strange Brands in Your Instagram Feed

The Atlantic has an interesting piece by Alexis Madrigal on internet sales: ‘The Strange Brands in Your Instagram Feed’. It’s worth a read, purely as a peek into some of the less obvious mechanisms behind online shopping.

Wired has an interesting reflection by Zeynep Tufekci on free speech, and what that means in practice as technology shifts: ‘It’s the (Democracy Poisoning) Golden Age of Free Speech‘.

These books explain a lot of things

A while ago I read a book titled This Explains Everything: Deep, Beautiful, and Elegant Theories of How the World WorksEdited by John Brockman, it was a collection of responses from a range of thinkers on their favourite theories or ideas, that had significant explanatory power.

In a related way, I wanted to try and start a list here of books that I’ve read that I thought had interesting or important ideas, in understanding different aspects of people / society / the universe. I think explaining everything is a tall order, so this is just a list of books that I found interesting on a range of topics. In a way it’s also a useful list for me, of keeping track of books that I think cover or explain useful or interesting theories. Obviously, a mention here isn’t an endorsement of the book or the author, etc.

I’ll try to keep it updated as I come across other interesting pieces. But in the meantime, tell me what you think: What are the books that explain essential, profound or important ideas? What have I missed on this list?

Science

It’s been years since I read it (and please be aware this isn’t an endorsement of the author), but reading The Blind Watchmaker by Richard Dawkins was a useful introduction to evolutionary theory. Interestingly enough, evolutionary theory is one of the ideas that cropped up quite frequently in This Explains Everything as a powerful idea.

James Gleick’s books on information theory (The information: A history, a theory, a flood) and chaos theory (Chaos: Making a new science) are fascinating, approachable introductions to very important branches of mathematics.

It’s been a long time since I read it, but I found a book on Popperian hypothesis testing and falsifiability useful (unfortunately I can’t remember the title).

Philosophy and ethics

There are a few books that I found interesting here – but it’s a complex area, and not one that I have a deep understanding of.

  • The Intentional Stance by Daniel Dennett was an interesting read; I think particularly in how to think about people and intentionality from a materialistic viewpoint. If I can paraphrase, Dennett essentially argues that intentionality is a model that we have of behaviour in the world, so that we conceptualise other people as agents, with goals and mental models.
  • Elbow Room by Daniel Dennett was also an interesting set of ideas, in how to reconcile a materialist viewpoint with questions about free will and ethical responsibility. Essentially, (if I can paraphrase many years after reading it), Dennett is arguing that traditional debates about free will and determinism define things in the wrong way; that if we think meaningfully about what free will means, we can have a useful form of free will, in a deterministic universe. Having said that, I think there is something to this webcomic sending up his approach – that it may feel a little too much like a glib redefinition.
  • Reason and Morality by Alan Gewirth was a difficult book. It took me several months to wade through, when I had the time to read in-depth. But I think meta-ethics is an interesting and important philosophical topic, and this is one of the more satisfying reads I’ve found. To very loosely paraphrase, Gewirth argued that for any agent that acts towards desired goals, there are implicit assumptions that, if logically carried to their conclusion, necessitate valuing the agency of others.
  • Beautiful souls by Eyal Press isn’t a particularly deep theoretical book. But I think it’s valuable to think about the factors that lead us to make courageous decisions, and for that reason this is well worth a read, as Press examines four ordinary people making courageous choices.

Psychology

Story-telling

Perhaps because I read a bit of fiction, story-telling is one of those things that fascinates me. What makes a good story? Why do we find some stories gripping, and others dull?

  • Story by Robert McKee is an interesting read. It’s not foolproof, but it works to break down the key components of what McKee thinks makes for a good story: difficult choices and unexpected consequences.

Politics

There are a lot in this category – perhaps because I’ve been reading quite a few since the blog started, where as other categories I read more of before I was taking notes.

  • The Dance of Legislation by Eric Redman is a fascinating first-hand account of a set of power struggles involved in the passage of legislation. It’s useful as an insightful account of the role chance and relationships can play in day-to-day political outcomes.
  • Collapse by Jared Diamond and The Collapse of Complex Societies by Joseph Tainter both deal with how a society collapses. Diamond’s thesis rests on five key factors:  environmental damage, natural climate change, war, weakened allies, and the ways societies choose to respond to these pressures. It’s a compellingly detailed historical account that societies can collapse because of poor responses to external pressures. Tainter’s thesis centres around diminishing marginal returns to complexity.
  • The Master Switch by Tim Wu is an excellent account of how media empires rise and fall. It’s particularly valuable because it identifies cycles over time, rather than analysing a static moment. He argues that as new technologies emerge, the field is fragmented between many contenders, before it gradually merges into a smaller number of firms. Given that media can influence political outcomes, these cycles are important.
  • The Company by John Micklethwait and Adrian Woolridge is an excellent outline of something that’s so ubiquitous it’s almost invisible – when did companies emerge? They make the compelling case that the legal structure of a company has a significant influence in our society.
  • Democracy for realists: Why elections do not produce responsive government by Christopher Achen and Larry Bartels is an important read. They argue that our ideas of how democracies work are wrong, and set out a strong evidence base of how a range of voter behaviour theories are contradicted by particular pieces of evidence. It raises interesting and important questions.
  • The rise and decline of nations by Mancur Olson an analyses of why some nations succeed, and why others fail. He sheds powerful light by focussing on the relationships within a society, and how particular groups can have an incentive to take action that is detrimental to the society overall. Interestingly, it seems that since publication, his thesis has held up reasonably well.
  • Manufacturing consent by Edward Herman and Noam Chomsky is an interesting read, and one of the few pieces I’ve read that focuses on the structural relationships between media entities and government. Have you come across any other good ones?
  • Between the World and Me by Ta-Nehisi Coates is a powerful reflection on race in America.
  • The origins of political order by Francis Fukuyama is an impressive attempt to tell a unified, theoretically grounded story of how political frameworks emerge. I may not agree with all of his conclusions, but I wish there were more books tackling questions like this on this scale. He writes about the historical emergence of the state, the rule of law, and democratic accountability.
  • Economic Justice by Stephen Nathanson sets out, very simply, a set of ideas about how resources should be distributed in society. For all that it’s very simple, it’s actually quite useful: there’s real value in a clear, simple exposition of basic ideas.
  • While not explaining deep theories, I wanted to quickly mention both Neil Chenoweth’s Murdoch’s Pirates, and Jane Mayer’s Dark Money, because they’re both well researched pieces that set out in some detail the mechanics of how particular entities interact with the political / media system, in ways that aren’t always obvious.

Economics

Paper promises by Philip Coggan isn’t an excellent book, but it is a starting point on an interesting question – what is money? How does it function? Essentially, it’s a store of value, a unit of exchange, and a unit of measurement. But fundamentally, money works because we expect that we can trade it with other people for something. This is, on some level, obvious, but occasionally easy to forget.

Revisionist history: Relationships and power

I’ve been listening to a little of Malcolm Gladwell’s very excellent Revisionist History recently, including the episode ‘The Prime Minister and the Prof‘.

It’s a fascinating examination of how Frederick Lindemann, an unappointed official (his role seems to have blurred between Minister and staffer – it’s not entirely clear to me) played a crucial role in Churchill’s decisions, that in turn may have contributed to or caused the deaths by starvation of millions.

It’s a fascinating listen.

Articles: Political allegiances and alien contact

Johnstown Never Believed Trump Would Help. They Still Love Him Anyway.

There will be think-pieces and books about the 2016 US election for many years to come. An article by Michael Kruse in Politico Magazine, in talking about voters who no longer expect Trump to fulfil core campaign promises but support him anyway, highlights one of the central questions – why people make the political choices that they do, and how and when those political choices change (or don’t). It comes back to a set of questions that I found quite striking in Democracy for realists, and that I haven’t seen a deep, or satisfactory answer for yet.

Have you read anything on political identity, and how or when it shifts? What would you recommend?

I’m particularly intrigued by the question of the shift – if we are really making political decisions based on identity rather than policy settings, what is it in our self-conception or our context that causes a shift in our political behaviour?

What Happens If China Makes First Contact?

I enjoyed Cixin Li’s Three Body Problem, so it’s fascinating to see him interviewed in relation to SETI efforts by China. One of James Fallow’s theses in China Airborne was that a large, complex project like building (and maintaining) an airliner is a crucial test of a modern economy, and that despite the technical know-how, there were areas where China might fail. Building the world’s largest dish for detecting alien signals would seem to be a similar, and in some ways more unusual, test.

Have you read much about the SETI in China? What did you think?

Robert Service’s ‘Lenin’

Lenin is a figure whose mystique has grown so much that it’s hard to know where the antipathy (or in some cases, adulation) stops and the actual history begins.

I’m not a Russian historian, so I’ve only read Robert Service’s Lenin. There are undoubtedly other biographies that handle Lenin’s story differently, in harsher or more positive light. Have you read any? Let me know if you’d recommend one.

From Service’s account though, and it seems well supported as a non-expert, Lenin was a selfish, dishonest person, willing to use people to his own ends, and to change course on a whim without apologising or explaining. He relentlessly shifted his ideological positions to suit his political context, whether it was internal political debates amongst exiles, or when running Russia after seizing power. Despite the vagaries of his life, Service doesn’t paint a picture of someone who experiences self-doubt, even in the midst of momentous decisions that will shape the course of history.

Lenin comes across as unfeeling, uncaring for the suffering of individuals. If he had perhaps built some kind of utopia, it might be an interesting case study in the sacrifices and tradeoffs involved in political change; as it is, he just comes across as callous.

That’s particularly so given the state that he created. There are some, I think, who would like to turn early Russian Communism into a utopia, gone awry in later years; but Service recounts how suppression of the press and ruthless political control (including a secret police) seem to have been integral from the very start. This isn’t a fall from grace, but a continual starting from the bottom.

I found Service’s account of Lenin’s role as a German agent startling, and fascinating. This is a piece of history I’d missed completely, and it was eye-opening. In earlier years, Service recounts, the Russian tsarist secret police used him as a way to tear apart one of the main internal political parties, and their agents actively supported his rise.

One interesting theme that emerged was how much debate there was at the time over the emergence of communism. It’s easy in retrospect for the emergence of a communist state in Russia to seem inevitable, but at the time there was a strong (and widespread, in the relevant circles) belief that agrarian states must become capitalist ones, before socialism could emerge – Lenin leapfrogged that idea, after initially supporting it.

It’s also funny to read the intense internal political debates over points that seem trivial in retrospect – see particularly the quote below, where a short sentence of a slogan becomes a paragraph.

I wanted to read about early twentieth century Russian history, so this was worth it for me. It may be for you too, if you’re looking to learn a bit more about that part of history. Otherwise, though, it’s a little dense for general reading.

What do you think? Would you recommend other biographies or histories on the same period?

Quotes

Lenin had greater passion for destruction than love for the proletariat.

‘The other Russia’, the Russia of barge-haulers, peasants, country priests and factory workers, was unknown to him except through reports from his father or the novels of Gogol, Turgenev and Tolstoi.

The Ministry of the Interior under the tsars was nothing like as systematically oppressive as the police force set up by Lenin at the end of 1917.

A less bookish nineteen-year old might have got acquainted with his peasants. But Vladimir’s transformation into a revolutionary came through volumes about the peasantry more than from direct regular experience.

From Marx he had already taken a philosophy of history which stressed that the conventional ideas in society were always framed by the ruling classes in their own interest. Morality was consequently a derivative of class struggle. Every political, social and cultural value had only a ‘relative’ significance. There was no such thing as ‘absolute good’; the only guide to action was the criterion: does it facilitate the more rapid and efficient progress through the necessary stages towards the creation of a communist society?

Vladimir Ulyanov stood out against the rest of the intelligentsia; he would not even condone the formation of famine-relief bodies in order to use them for the spreading of revolutionary propaganda. Virtually alone among the revolutionaries of Samara and indeed the whole empire, he argued that the famine was the product of capitalist industrialisation. His emotional detachment astonished even members of his family.

Thus the famine, according to Ulyanov, ‘played the role of a progressive factor’, and he blankly refused to support the efforts relieve the famine. His hard-heartedness was exceptional.

He ridiculed the possibility that capitalist economic development was avoidable.

There was jubilation despite the information that innocent people had been shot outside the Winter Palace. The point for Lenin was that tsarism stood on the edge of a precipice; the throne of Ivan the Terrible and Peter the Great was beginning to totter.

Lenin helped to devise a scheme to lay his hands on this legacy by contriving to get two Leninist Bolsheviks, V.K. Taratuta and A.M. Andrikanis, to woo the sisters, marry them and obtain funds for the faction.

The delegates were perplexed by a basic question: if Leninist Bolsheviks agreed with Mensheviks about the importance of legal political activity, why was Lenin still using a megaphone to announce the iniquity of Martov and his fellow Mensheviks? Lenin ducked the question. In truth there was no intellectually respectable answer available.

The Okhrana saw Lenin as a brilliant potential executor of the task demanded by the Emperor: the disintegration of the Russian Social-Democratic Labour Party. The enhancement of Lenin’s career was the Okhrana’s confidential priority.

For them, Lenin was the single greatest obstacle to unit among Russian Marxists.

Lenin kept faith in himself because he saw nothing to shake his assumptions. The Russian Empire and the rest of Europe, he thought, were on the brink of Revolution. Another assumption was that social classes, even if they were quiescent for lengthy periods, could quickly rise to the tasks of carrying out Revolution. A third was that it did not matter how small the party of Revolution was before it seized power. The most important thing in Lenin’s eyes was to have a party, however minuscule, of indoctrinated revolutionaries who could spread the word. A fourth assumption was not stated expressly, but indisputably he believed that the cleanest test of a revolutionary was simply whether he or she stuck by Lenin in factional disputes.

The wartime phenomenon of socialist parties supporting their governments became the norm … Only a few parties held to the Socialist International’s policy of active opposition to the war, and Russian parties were prominent among them.

The seeds of strategy for the October Revolution of 1917 were germinating in Switzerland even before the Romanov monarchy’s downfall.

Thus Lenin was trying to foment the ‘European socialist revolution’ with a secret financial allowance from people he publicly denounced as German imperialists … There was much circumstantial evidence that the Bolsheviks were in receipt of money from Berlin …

… Congress agreed to drop the slogan ‘All Power to the Soviets’. After a lengthy debate about slogans, it was decided to replace it with ‘All Power to the Proletariat Supported by the Poorest Peasantry and the Revolutionary Democracy Organised into Soviets of Workers’, Soldiers’ and Peasants’ Deputies’

… Lenin indicated that he wanted to introduce the time-and-motion principles of the same American theorist, F. W. Taylor, whom he had once excoriated as an advocate of capitalist interests.

There were turns in the history of Russia and the world that would not have been taken without Lenin. He decisively affected events, institutions, practices and basic attitudes … Not only the October Revolution but also the Brest-Litovsk Treaty and the New Economic Policy might not have occurred without his influenced – and the Soviet regime might have quickly disappeared into history’s dustbin.